Pro-Bel Group Limited (ALIG) Earnings Call Transcript & Summary

Welcome to the Alimak Group Investor Call. [Operator Instructions] Now, I will hand the conference over to CEO, Ole Kristian Jodahl. Please go ahead.

Thank you. And yes, a warm welcome to all of you for this short conference about the acquisition that we made, Pro-Bel. With me, I also have Herve, who is the Head of Facade Access. He will give a little bit more deeper insight into the company. I also have Johnny and Sylvain with me here. So, yes, if you turn page, Johnny. This, you know, so I will not spend time on this intro pages about global industrial company. Let's move on. We have our New Heights strategy. Next, we have our financial and sustainability targets. And then next, please. And then, we come to the company. So yes, very happy to announce that we are able then to yesterday sign this deal, and the closing is in the making, should be also relatively soon. So it's not a big thing to get it closed, but it wasn't possible to do in the same day. It's a project we have been working on for quite a while. So it's North American provider based out of Toronto in Canada, providing then suspended access and fall protection solutions to both the North American, or to the U.S. and to Canada, so the North American market. It's a company that Marc Lebel started 50 years ago, and for 45 out of those 50, it's been working on these solutions, developing the company. So it's a very long, solid history, and they have become the leader in their -- in this profession. It's a very complementary offering. We have been talking about for a long time that we wanted to go more into lower buildings and a more comprehensive offering and not be so dependent on the tall buildings, and this is in the midst of that strategy for Facade Access. And that means it also -- it brings synergies, and it also brings growth opportunities because it's a lot of the same customers, it's the same market. We can work with the same end customer, whether it's architects, it's general contractors or end users. Financials of this company is also very strong. It's CAD 69 million in the last 12 months trailing for April -- by April '26, which is then SEK 473 million based on today's rates. Adjusted EBITDA of CAD 24 million, so that means SEK 165 million. And also a very strong margin of 34.6%. And this is a margin which has -- is not only there for the last year, it's a margin level, which they have been able to have for over many, many years. It's been a growing business, of course, over many, many years or since they started, but the last 2 years has been a slow growth. It's more flattish. And that's been due to the current turbulence, as we all know, related to tariff situation, but we will come a little bit more back to that. So transaction highlights. We pay CAD 200 million for the company, which is then close to SEK 1.37 billion. It gives a multiple of 8.3 on the adjusted EBITDA. We pay CAD 177 million now upfront at closing and to the last CAD 23 million will be paid after 18 months. And we have financed it all through our existing facilities. And from a leverage perspective, this will slightly overshoot our 2.5x target, which we say we normally should stay within, but we can exceed short term, and we should be well within our frame again by the end of this year. So with that, we turn page, and then, I leave the floor to Herve, so he can give a little bit more detail about the business and how he sees this into Facade Access. Herve?

Yes. Thank you, Ole. Hello, everyone. I hope you can hear me well. So a few words about Pro-Bel. Pro-Bel is operating in a structured, standardized, and I will say, a low-friction operating model. They are engineering, installing. They are also servicing safety system for people working at heights. Same as Facade Access Solution, they are operating on facade as well on rooftop, both commercial and residential, across North America, we'll come back to the point, both U.S. and Canada. Thinking about the portfolio, we are talking about roof anchors, davit systems, lifeline, monorails, but also BMU solution. So Pro-Bel, what it is, first, we are talking about design and engineering. As you may know, the -- every building is different. So Pro-Bel is also offering this customized engineering solution for each building for sure to be compliant with the safety code and the standards. Second, I will say that they are also a turnkey solution provider. They are manufacturing, they are installing and they are also commissioning the systems. And the third part, and this is probably what part to remember is the recurring services. They are very strong in inspection, in testing, in recertification and an ongoing maintenance. So this part is especially important for us and for the future because this -- all these safety systems that we are talking about must be inspected and recertified regularly by law. And this is what I call the compliance model. So my view is that today, when we -- once Pro-Bel is on the building, I will say they stay on that building. That's also what we call the life of the assets. These are recurring contracting revenues and long-term customer relationship are same as us on top of the new installation work. So the combination between the sales approach, the compliance driven, but also the building aftermarket is exactly what makes Tractel also attractive. Next slide, please, Johnny. So -- Johnny?

We have changed it, Herve, so you can continue with the next slide.

Okay. Thank you. So where we are joining forces with Pro-Bel, I will say, first, for diversification. So today, as mentioned by Ole, the Facade Access trend is on the engineering solution, sometimes complex, but for sure on the high-rise building. And I will say Pro-Bel is taking us to what we call the low and mid-rise segment where building are simpler and where they are far more of them. This is what I was explaining also during the last Capital Market Day. It will make us as a division more resilient, less dependent on any single segment or just project cycle. Then we can talk about expansion, expansion of our customer offering. We know how the -- how can we offer now a full range of access and safety solution, strengthening for sure the position -- our position in North America. And third, talking about synergies. This altogether bringing us to a complementary capabilities. We are talking about product portfolios and customer relationship. So when we are now combining and sharing best practices, operational expertise across the both organization that for sure will create real opportunities for operational efficiencies over time. In few words, I will say that it's not today just adding revenues. It's making the full and the whole division stronger order, broader, and for sure, more resilient. Next slide, please. So how Pro-Bel is fitting our Facade Access solution platform. And I will say -- I will ask you just to think about the -- our offering as a ladder of complexity. On one side, on what we call the IT engineering end, we have our both brand, CoxGomyl and Manntech, and this is where we are operating with a complex, again, customized and custom BMU system, most of the time for iconic towers. Then, we have Tractel sitting in the configured, and I call it, mid-complexity space. We are also using Tractel as a customized and customer solution access for infrastructure. And what we didn't have, and I will say at scale, is what we call the core, the high volume end on that ladder, the standardized access solution. And this is exactly what Pro-Bel is sitting now. So it's a very good complement for our portfolio. So now, if you think about whatever the building is, and it could be from a 2-story commercial roof to a super tall tower, I will say the division has a solution across both equipment, but also aftermarket. So this is really strengthening our market leadership, owning the full range of access solutions. Next slide, please. So this slide is probably one of my favorite ones, is what you can see is showing the -- why we can grow faster together than just a part. And please look at the split. Our existing Facade Access solution in North America, we are dealing -- 90% of our revenues are coming from U.S. And I will say only 10% is coming from Canada, where Pro-Bel today is 50-50, with a very strong, and I will say, established position in Canada. So immediately, when each other -- I would say, each of us is strong, where the other is less present. So in terms of, again, complementary solution is very, very interesting. On one side, we can take the Pro-Bel product into a large U.S. footprint and also our sales force, and -- but also the -- where we are not focused, it's exactly on the same states in U.S. So we are not operating in the same state between Pro-Bel and the current Facade Access solution. So, in addition, as I was mentioning, the Pro-Bel also give us this established platform in Canada to build on. On top of that, the geographical coverage, we have also the cross-selling. The customer needs Pro-Bel inspection, the certification services. And we can also access the broader access solution with the Pro-Bel customers. So same buildings, same decision maker, and this is where we will have to work on. A few words also on the longer term, the Pro-Bel operating model is proven. This is what we are buying, and frankly, it is also exportable. So today, the focus and the integration will be in North America, but it's also a model that we believe we can take international over time. Next slide, please. The question that you -- sorry, the question that we can see is on the operational excellence. Here, we are talking about how we can justify, how can we explain this 34.6% adjusted EBITDA. I think that the answer is the operational excellence. First, we are talking the standardization. Pro-Bel works on, what we call, a modular standardized design, very repeatable processes, bringing lower unit cost and very consistent quality. Two is the stock. They are running a very disciplined inventory strategy. In the core access solution, you're often winning the deal, not only on price, but also on the availability and lead time. So very important for us. And I will say also on the sourcing. When you are starting now to combine Pro-Bel with our North American Facade Access Solution, the purchasing volume will for sure unlock better supplier pricing and in terms of components that we are both sharing. On top of that, and this is something that I repeated already during the Capital Market Day, is the team discipline. We have in a way the same DNA here. Behind all these processes, we have a very focused and dedicated team at Pro-Bel. The discipline in execution, the attention of the detail, the ownership of the daily performance are, for me, the key reason for us, the key reason why the model is working so well. So when you are putting all together, the standardization, but also the inventory discipline together with the operational leverage, we think that this is really scalable and margin accretive to the division. So again, high-quality recurring revenues, high margin business will make us more diversified, for sure, open to new growth, and we know how to run the business. So very pleased with this partnership. Next slide. And I think that Ole give you the lens here now.

Yes. Thank you, Herve. So just a short summary. So as you understand, it's a very nice -- another step in our New Heights strategy. It will make the Facade Access division much more resilient and also diversified, and that also means it adds the same thing to the group. It's a highly profitable business, which means that it will, of course, impact the profitability level significantly in the Facade Access division. I want to highlight that, that doesn't mean that this is solving the underlying business. The targets that we are having on the existing business remains there, and we know what we can do with that, and we are moving ahead full speed with that also. So this is something that comes on top of that, but it also has an impact on the group profit level, as you understand. So overall, it strengthens the group and further takes us forward in our profitable growth journey. So with that, I think we take next slide and move to Q&A.

[Operator Instructions] The next question comes from Oscar Ronnkvist from SEB.

First, I have just 2 boring modeling questions. The first one would just be the integration. I assume that this is 100% Facade Access. Or is it any sort of spillover to like HSPS, et cetera?

No. This is 100% Facade Access, yes.

Great. And the next one, could you share anything on the sort of CapEx levels or depreciation levels for Pro-Bel?

Yes. Maybe, Sylvain, you want to comment?

Yes, it's small. It's not -- they don't have their own manufacturing, so we are talking something around CAD 0.5 million depreciation per annum. So it's very on a low level.

Yes.

Perfect. And the next one, just could you share anything on Pro-Bel's share of service sales and the growth profile, please?

Yes. So today, they classify service slightly different than us, but the way they have done it, it's around 17% of their sales, which is what they qualify as pure service. We would need to work a little bit more on it to say the exact figure for us, but it's not far from that figure as it stands today. The business has been growing very well over these 45 years. But as I also mentioned in the beginning here, the last 2 years due to the turbulence around tariffs and the U.S. situation, the growth has stalled. And -- but we expect again that -- and we have growth plans to this, and we expect absolutely that this should continue to grow and grow along with what we normally see as our growth pattern in our -- organically in our business.

Perfect. Yes, just a final one. Obviously, looking at the Facade Access, I think this adds approximately 5 percentage points to the margin. So just -- I think you targeted Facade Access to be quite in line with the group average on the margin side on your latest CMD. So just wondered if this sort of alters anything on your ambitions? Or are you still expecting a large or a significant margin expansion on the sort of underlying Facade Access business?

Yes. It's -- as I just also said, absolutely, that this will add a good margin contribution to the existing business, at least in the range of around 4 percentage points. And the underlying business and the plans for improving that, as we have been talking about for a long time, and as we also have been doing, we have slowly and steadily been improving the underlying business, and that, that should come also more, remains absolutely. So this is not something that fixes the all the problems. They are there, and we are continuing to fix that. So this is something that we expect on top of the existing performance improvement program.

The next question comes from Andreas Koski from BNP Paribas.

So a few questions from me as well. I understand that it has been growing over the last 40 years, but can you give us an understanding of what the organic, say, CAGR has been over the last 5, 7 or 10 years for Pro-Bel?

I'm not ready to give you the exact number on that now, but it's been organic growth over the last years, absolutely. It's just last 2 years, which has stalled, else it has been historically a nice organic growth. So it's not -- it's been growing in the years, absolutely, up to the last 2 years.

Understood. And can you say what you expect for fiscal 2027? Do you expect any major changes to top line or margins compared to fiscal 2026?

No.

So similar?